The World Economic Forum (WEF), in collaboration with Boston Consulting Group, released a report warning that global GDP could drop by as much as 22% cumulatively by 2100 if climate change continues unabated. The report, The Cost of Inaction: A CEO Guide to Navigating Climate Risk, highlights the financial risks for both economies and businesses worldwide.
The report estimates that climate-related disasters, including storms, floods, and droughts, have caused $3.6 trillion in damages since 2000. It also points out that companies, particularly those in infrastructure-heavy sectors, could face operational risks jeopardizing up to 25% of their EBITDA by 2050.
“Climate risks are materializing today, with impacts already felt across industries,” said Pim Valdre, Head of Climate Action at the WEF. The report warns that transition risks, such as higher carbon pricing and shifting market demands, could further erode profits. Some emissions-intensive industries may see additional costs equivalent to 50% of their EBITDA by 2030.
The WEF report also outlined a potential path forward, stating that investments in mitigation and adaptation measures—equivalent to 2-3% of cumulative global GDP—could prevent 10-15% in economic losses by the end of the century. The report stressed that early action could yield significant benefits, with companies reporting returns of $2 to $19 for every dollar spent on climate adaptation.
Patrick Herhold, Managing Director and Senior Partner at Boston Consulting Group, emphasized the importance of corporate leadership. “The decisions made today will not only shape the future of individual businesses but also determine the trajectory of the global economy,” he said.
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